Disclaimer: I have never worked for a rent-to-own company (I assume that’s what this is), but I did work for a payday loan company, geared toward the same type of consumer.
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- I do the math just from their posted specials and the cost for rental seems crazy. You could get a very small loan or a credit card and do better to buy and pay off. One would have to have some form of decent credit to get the rental - so I would assume some credit provider would take a chance. Why rent for so much money?**
These stores are geared toward consumers with sub-prime credit, those who often won’t qualify for credit cards or small loans. Actual credit is usually not checked, but other means of looking at histories with rent-to-own and other sub-prime credit companies are used.
Also, these stores can be effective for people who do not intend to actually own the goods at the end of the period - for example, if I was a renter who did not need to actually purchase a washer and drier (whether because I didn’t want to move it or because I didn’t intend to be in the area for a long time and wanted to have them, but again not move them), I could rent them and return them when it was time to move again.
2. Are the items rented, re-rented? I see stuff leaving all the time. I can’t remember ever seeing stuff coming back. I would assume much would come back in used condition so much so that it couldn’t be re-rented. Can you re-rent a mattress? Eeeewww.
I’m not sure - my understanding is that it depends on the condition of the goods and the terms of the agreement. For many people, the plan is to actually own the goods at the end of the term, so there wouldn’t be a return. Goods can be repossesed by the company, and those goods are often sold at a substantial discount. I used to work next door to one of these companies and I considered purchasing a repo’d washer and drier very cheaply, but decided not to because of not knowing what kind of shape it was actually in.
3. How much stuff is rented? We live in a small town and all I ever see is one thing after another being taken out of a box. It’s an endless supply of cardboard. They’re very nice about letting the people in the development come and take boxes when we need them.
Depending on where they’re located, these companies can do a huge business. While they might not do well in some of the wealthiest areas of a county, they can do extremely well in middle and lower income areas.
I’m just interested in the overall concept of the business. Anyone have a friend or relative in the business and can shed some light on it?
The basic idea of these companies is rent-to-own. The customer comes in, picks out what they want, some minor checks are done (but again, NOT a credit check, normally), and it’s delivered to their house (or taken with them, depending on the size of the goods). They make payments - these can be every week, every other week or monthly depending on the agreement and at the end of the term, they own the product. The payments are generally fairly low, say $7.50 a week or something like that. This draws in the level of consumer that these stores cater too - it can be tough to think about shelling out $200 at once for a washer, but paying that $7.50 a week looks much more reasonable. You’re right though, by the end of the term, these folks may end up paying double what the item is actually worth - I think there was a lawsuit several years ago against the RTO companies, but I don’t remember the specifics.